Bill Morneau: Banks Need Guidance on Consumer/Business Property Debt

I wrote today to Finance Minister Bill Morneau in response to many concerns raised by constituents about their banks' handling of property debt and struggles by consumers and businesses in making payments due to the COVID-19 pandemic. I urged the Minister to provide directives to the banks with respect to deferring payments and putting on hold all actions such as eviction, foreclosures and penalties.

Here is the letter:


March 31, 2020

The Honourable Bill Morneau, P.C., M.P.
Minister of Finance
House of Commons
Ottawa, Ontario K1A 0A6


I recognize there is much on your plate in the current crisis. I will limit my comments today to concerns I have with respect to the banking industry’s relationship with their customers, in the effort of ensuring that one industry doesn’t transfer the cost of this crisis downstream, and thereby, cause further damage.

The Canadian financial services sector stepped forth early in the COVID crisis to assure their clients that banks would adjust business terms to accommodate short-term revenue shortfalls associated with our current situation. This assurance was warmly received by all.

I will point out some gaps that have emerged in this representation – gaps that are leading to an increased level of stress and uncertainty amongst many of my constituents. It is in the interests of all Canadians that we weather the economic shutdown associated with the COVID crisis so that we emerge quickly, with strength, when the crisis ends.

The main concern revolves around property – whether that is represented by a rent payment or a mortgage payment by a family, or a rental payment by a business to a property owner, or by that property owner to their financial service provider. Payments on property are going to face distress for the April – June period – during which time businesses will show significantly decreased revenue (if any at all), and workers that have been laid off or are otherwise income-constrained will likely be in technical default of terms with their mortgagee or landlord.

Being clearly ahead of any repercussions from this eventuality will provide clarity to all parties and will ease some of the anxiety being felt by these parties.

Clarity to all parties would require action from you and the Department of Finance, instructing all financial institutions carrying on business involving Canadian properties (being land and buildings, in this case) that certain actions are prohibited during this extraordinary period. These prohibitions would necessarily flow to landlords that are clients of Canada’s financial institutions. Those actions should include:

• No evictions permitted – and rent / mortgage deferrals to be guaranteed up to three months
• No penalties or payments to be incurred as a result of the deferral of payment of rental or mortgage payment.
• No foreclosures allowed on properties where the mortgagor suffers a rental deferral as a result of deferred payments associated with the current situation.
• No reporting of default during these times to credit agencies, which would raise the cost of financing for consumers and businesses going forward.

I recognize there will be some cases that ‘fall through the cracks’ and losses will be incurred. But the vast majority of Canadians who are in the midst of economic uncertainty will have peace of mind that their homes or their businesses will not be unreasonably disrupted in this tumultuous time, even as they cannot get through to their financial service provider to address their concerns.

I will note that this is the objective of your Government’s policy of getting funds to Canadians that have been income-constrained. You will recognize that many of these funds will not find their way to the recipients in time to meet their own requirements. Your action here addresses the gap between expense and income.

Thank you for your attention to this matter. If you have any questions or concerns, please contact me directly.

Greg McLean, M.P.
Calgary Centre

cc: The Honourable Jean-Yves Duclos, P.C., M.P.
The Honourable Pierre Poilievre, P.C., M.P.